Cramer's Flip: Obama Treasury Pick Once 'Disaster,' Now 'Smooth Hand'

By

Jeff Poor

November 25, 2008 - 12:00pm

The Dow Jones Industrial Average (DJIA [1]) raced up nearly 500 points [2] when word got out that New York Federal Reserve Bank President Tim Geithner would be named Secretary of the Treasury under President-elect Barack Obama. And, though the move appeared to shore up confidence in the financial markets – not everyone thought it would be a good move – at least before the announcement.

CNBC “Mad Money” Jim Cramer host railed against Geithner as a “disaster” and a “total fool” in a blog post on Nov. 7. But after Obama tapped Geithner for Treasury, Cramer retreated to calling Geithner a “smooth hand.”

“If Tim Geithner, the New York Fed chairman, gets a top spot in the Barack Obama’s [sic] cabinet, we are done, finished, kaput. It is that simple,” Cramer wrote on TheStreet.com in a blog post [3] titled “No Justice if Geithner Lands a Cabinet Spot.”

Cramer reasoned that Geithner was too associated with the policies of the Bush administration. But Cramer has supported most of the bailout initiatives – in one form or another – the Bush administration has implemented under Treasury Secretary Henry Paulson including bank bailouts [4], the AIG bailout [5] and one the Bush administration has not even endorsed yet: the General Motors bailout [6].

“The fact that ANYONE connected with this current administration’s economic policies could have a role in the new administration is incredibly frightening to me,” Cramer wrote. “The fact that the key architect of what went wrong is going to be the financial czar is enough alone to reaffirm my view that the stock market will be a treacherous place for the next five years.”

Cramer blasted Geithner for his role in the decision not to bail out Lehman Brothers, a financial services firm that filed for bankruptcy in September 2008.

“… Geithner made the fateful decision – the one that spawned so much of the trillions of dollars in losses…to let Lehman Brothers die,” Cramer wrote. “Geithner had within his possession compelling evidence of what could go wrong if he closed it. He ignored it. He made the most wrong decision of wrong decisions we have seen in this era. He is a total fool.”

Cramer continued to disparage Geithner in his blog. “Alas, what does Geithner have going for him?” Cramer wrote. “A fabulous behind-the-scenes PR campaign with everyone who writes and speaks about the Fed.

“He’s so good at it. And he’s a Democrat. He will be cheered when he gets the job. He will be a disaster.”

But 17 days later, on Nov. 24, Cramer toned his criticisms down and even had some words of praise for Geithner. “He’s a smooth hand,” Cramer said on NBC’s “Today.” “I wish he weren’t involved with what’s gone wrong but the transition is bold, smart, fast, good.”

Cramer admitted on “Mad Money” he wasn’t a fan of Geithner, but if that’s what Wall Street likes, then that’s good enough to temper his criticism.

“Now you know, I have not been a fan of Tim Geithner, our soon-to-be Treasury Secretary,” Cramer said on “Mad Money.” “But I also have to accede to the fact that Wall Street likes him and that’s what matters for the moment. We need to restore some confidence on Wall Street – Geithner’s appointment has done it. So even though I think he has been inextricably linked to what this administration has done wrong, I will give him the benefit of the doubt like Cramer-fave President [Abraham] Lincoln: magnanimous in defeat.”

Cramer did speak approvingly of former Clinton administration Treasury Secretary Larry Summers, who was named to head Obama’s National Economic Council on Nov. 24 [7].